Business

Company taxes up 19% since 2005, says PwC

  • 22 January 2013
  • From the section Business
HM Revenue and Customs - man looking at forms
Image caption The UK's largest companies paid the same amount of tax in 2012 as in 2011, the report said

The UK's biggest companies have seen their overall taxes go up by 19% since 2005, a report has said.

The survey of FTSE 100 finance directors showed that despite a 17% fall in corporation tax between 2005 and 2012, other taxes had risen by 58%.

The amount of corporation tax paid by large companies has been in the media spotlight recently.

The PwC report showed that companies paid a total of £77.1bn in tax in 2012, 14.2% of total tax receipts.

The economic slowdown in the UK as well as a reduction in the rate of corporation tax have led to a 17% drop in corporation tax payments since 2005.

The UK government has stated that its fiscal objective is to make the UK the most competitive tax system in the G20.

However, other business taxes such as VAT, employers' National Insurance contributions and business rates have all risen.

In 2012, for every £1 of corporation tax paid, the Hundred Group participants paid another £2 in other business taxes, the report said.

"We're in the middle of a well-trailed programme for reducing the rate of corporation tax while other business taxes such as NI and VAT have risen," Andrew Bonfield, chairman of the tax committee of the Hundred Group said in a statement.

"These other taxes tend to be easier and less volatile since they're not dependent on profits," he added.

The UK's largest companies paid the same amount of tax in 2012 as in 2011, despite the economy being in recession.

"These latest results show the continued significant contribution of Hundred Group companies despite the double-dip recession," Mr Bonfield said.

Controversy

There has been much controversy recently about multinationals such as Starbucks, Amazon and Google paying only minimal amounts of corporation tax.

The Parliamentary Public Accounts Committee, which has been looking into the matter, has said that it will examine the role of the big four accounting firms including PwC in helping firms minimise their tax bills.

"There's unprecedented interest in the amount of corporation tax businesses pay," Mary Monfries, head of tax policy at PwC, said.

"The current debate sometimes confuses compliance with the rules with tax policy itself. Government policy has changed and our study shows the picture of tax paid has changed as businesses comply with the rules," she added.

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